July, 1921
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Industrial Alcohol and Its Relation to Prohibition Enforcement from the Manufacturer’s Standpoint 1 By M. C. Whitaker U. S. INDUSTRIAL ALCOHO CO., ~ 27 WILLIAMST., NEW YORK,N. Y .
The Chemical Profession has cause to be concerned over the present and future status of alcohol for legitimate industrial and scientific purposes. They may well ask such questions as: Why am I unable to get alcohol to continue the manufacture of U. S. P. medicinals, antiseptics, flavoring extracts, perfumes, and the infinite variety of daily household necessities requiring pure alcohol in their production? Why is it so difficult for me to get alcohol for scientific use for resc,arch and for educational purposes? Why do I have t o p a y a tax of 1000 per cent on alcohol used in my industry, when we have a fifteen-year-old law giving us tax-free alcohol for industrial purposes? What has the prohibition of intoxicating liquors got to do with alcohol for industrial uses and for purposes of national defense? Let us first clarify our problems, and then possibly suggest remedial measures.
THECOSTRADICTORY
PROVISIONS OF THE
VOLSTEAD ACT
The National Prohibition (Volstead) Act, “To prohibit intoxicating beverages, and to regulate the manufacture, production, use, and sale of high-proof spirits for other than beverage purposes, and to insure an ample supply of alcohol and promote its use in scientific research and in the development of fuel, dye, and other lawful industries,” was passed with three principal divisions, or Titles: Title I-To provide for the Enforcement of War Prohibition (automatically replaced by the second section (Title 11) which became operative on January 16, 1920, the effective date of the XVIII Amendment). Title 11-Prohibition of Intoxicating Beverages. Title 111-Industrial Alcohol. Alcohol is defined in the prohibition section of the Volstead Act as follows: The word “liquor,” or the phrase “intoxicating liquor,” shall be construed to include alcohol, brandy, whiskey, rum, gin, beer, ale, porter and wine, and in addition thereto any spirituous, vinous, malt or fermented liquors, liquids and compounds, whether medicated, proprietary, patented or not, and by whatever name called, containing one-half of 1 per cent or more of alcohol by volume, and which are fit for use for beverage purposes. The same alcohol is defined in the Industrial Alcohol Section of the same Act as: The term alcohol means that substance known as ethyl alcohol, hydrated oxide of ethyl, spirit of wine, from whatever source or whatever procezs produced. Thus it is, a t the very outset of our problem, that law has combined with nature to give a Dr. Jekyll and a Mr. Hyde character t o one of our greatest chemicals, alcohol. Under the prohibition section of the law, it is unlawful to advertise, manufacture, sell or possess for sale, any utensil, contrivance, machine, preparation, compound, tablet, substance, formula, direction or recipe, advertised, designed or intended for use in the manufacture of alcohol, or it is unlawful to solicit or receive, or knowingly permit an employee t o solicit or receive from any person an order for alcohol, or give any information as to how alcohol may be obtained, subject to certain specific exemptions. It is provided on the other hand in the Industrial Alcohol Section of the law, Section 13: That the Commissioner shall from time to time issue regulations respecting the establishment, bonding, and operation of industrial alcohol plants, denaturing plants, and bonded warehouses authorized herein, and the distribution, sale, export, Presented before the New York Section of the American Chemical Society, New York City, June 10, 1921. 1
and use of alcohol which may be necessary, advisable, or proper, to secure the revenue, to prevent diversion of the alcohol to illegal uses, and to place the nonbeverage alcohol industry and other industries using such alcohol as a chemical raw material or for other lawful purpose upon the highest possible plane of scientific and commercial efficiency consistent with the interests of the Government, and which shall insure an ample supply of such alcohol and promote its use in scientific research and the development of fuels, dyes, and other lawful products. All regulations so issued shall have the force and effect of law. Under one section of the law you are forbidden to whisper the terrible word, because of its booze associations, while under the other section you are required t o proclaim alcohol from the housetops as a national necessity. I n the administration of this law, when there is an apparent conflict of language, the prohibition officers appear to work under the injunction usually given to beginners learning to drive an automobile: “When in doubt, push both feet.” Prohibition is regarded by them as their first duty, and when in doubt, “stop everything-engine and all.”
EXAMPLES O F INTERPRETATIONS OF THE VOLSTEAD ACT Narrow rulings under these provisions have led to such ridiculous interpretations as may be illustrated by the following instances: (1) The General Counsels of the Telephone Company in both Boston and Baltimore advised their clients that the listing of the name “U. S. Industrial Alcohol Co.” in the directory would be an illegal act under the prohibition law. The Company was obliged to obtain an official ruling from Washington in order that its corporate title might be listed in telephone books. (2) The Prohibition Commissioner, under date of March 22, 1921, advised the U. S. Industrial Alcohol Company that the use of the words “Cologne Spirits and Alcohol, Pure and Denatured” on their letter heads (standardized for fifteen years) was illegal under the prohibition act, and must be stopped. As result of an appeal to the solicitor of the Internal Revenue Department, this ruling was finally reversed under date of May 12. (3) E. B. Badger & Sons, of Boston, attempted to purchase a copy of “Young’s Fractional Distillation” from a local book store, and were advised by clerk that they had the book, but that it could not be sold under the prohibition law. On May 6, 1921, the following letter, signed by John F. Kramer, Prohibition Commissioner, was directed to Badger: Gentlemen: Replying to your letter of April 29, 1921, you are informed that if Young’s “Fractional Distillation” is a scientific publication which is commonly used by scientists, this office perceives no reason why it should not be purchased by you for the use of your engineering department This oflice issues no permits t o enable scientific persons to procure such technical works, but it is anticipated that this letter exhibited to any book seller who has such a work for sale will serve the purpose.
(4) On May 15, 1920, the U. S. Industrial Chemical Company of Baltimore delivered to the steamship piers 32 drums of isobutyl alcohol for export to France. The ship’s agents refused to accept the goods, because he noted the word “alcohol” on the packages and in the bill-of-lading, stating that they were not permitted under the prohibition laws to handle alcohol. The goods had to be reloaded, trucked back to the plant, a round trip distance of twelve milzs, relabeled and new billsof-lading prepared under the name Is0 Butyl Solvent.” Under this name the steamship company accepted the consignment, and the reason for the disguise had to be explained to the French buyers as well as such a thing can be explained to a chemist of a sister Republic. ( 5 ) The Bishop Gutta Percha Company applied for a permit to use tax-free alcohol in their laboratories. The answer to the application, under date of May 6, contains the following paragraphs : This permit is granted on condition that the permittee agrees t o keep on hand a stock of tax-paid alcohol for the routine work of the laboratoryand that the tax-free alcohol withdrawn under this permit will be used only for original research and development work. When the research work has been
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developed into an actual working process and the function of the laboratory is merely to continue the operation of this process, tax-free alcohol may not be used. Routine work such as tests or analyses for purity of various materials both during the process of manufacture and in determining the purity of the finished product does not appear to be exclusively scientific research, and tax-paid alcohol should be used for such purpose.
THERELATIONOF
PROHIBITION REGULATION TO INDUSTRY Chemists as a profession are not concerned with prohibition, except possibly t o consider it and classify it in its proper place in relation to industrial economics and national defense. Prohibition cannot be classed as a national necessity, and it certainly is not even a luxury; it is a great social experiment which the United States has determined to try. Such a social experiment need not and should not be so administered as to interfere with the economic needs or the national defense requirements of the country, any more than a similar experiment should be permitted to disorganize the working forces, or interrupt the production of your factory. The spotlights of the world are turned on the prohibition administration of the United States; little wonder they are nervous and jumpy. Even under this strain they mu3t not be permitted to disregard the fundamental principles of business economics and national welfare, in order to carry through an ambitious experiment in sociology. Mr. Wayne B. Wheeler, General Counsel of the Anti-Saloon League, made, before the Judiciary Committee, on Friday, May 20, 1921, the following very significant statement: “If it comes to the point where it must be a choice between medicaments for medical preparations and the enforcement of the law, I think we must choose law enforcement.” Mr. C. R. O’Connor, until recently Federal Prohibition Director of New York, is reported to have said, in answer to a protest by manufacturers in regard to the reluctance of his office to approve permits to secure alcohol for their industrial operations, “Industrial Alcohol be damned; you know it’s all booze!” One of the greatest difficulties connected with the separation of industrial alcohol from prohibition enforcement is reflected in these two statements by high authorities in the Prohibition Enforcement program. The do-or-die fanaticism reflected in Mr. Wheeler’s statement, and the utter lack of knowledge as it0 the existence of an industrial alcohol problem, as reflected in Mr. O’Connor’s statement, represent the frame of mind of ninety per cent of the prohibition advocates. It is a notorious fact that the Anti-Saloon League dominates prohibition legislation and enforcement. When the prohibition law to enforce the Eighteenth Amendment was presented to the Judiciary Committee by Mr. Wheeler, it consisted of what are now Titles I and 11, for the enforcement of prohibition, with absolutely no provision for industrial alcohol. What is now Title 111, the Industrial Alcohol Section of the prohibition bill, was drafted and introduced as a government measure a t the direct suggestion of the then Commissioner, Daniel C. Roper, in order to save industrial alcohol. It was through the foresight and influence of the officials of the Bureau of Internal Revenue. and not due to any consideration on the part of the promoters of the Anti-Saloon League Bill, that the bills presented to Congress to enforce prohibition carried any provision whatever for industrial alcohol.
N ~ E OF D EDUCATION OF PUBLIC AS T o INDUSTRIAL ALCOHOL The entire disregard of the right of existence of alcohol, the chemical, for industrial purposes can be explained only on the assumption that they are totally lacking in knowledge of its essential relations to chemical industry and to national defense, and that they do not understand its relation to their home comforts, to the health of themselves and their families, and to the progress of science, Granting this ignorance, it is not surprising that they believe and advocate, as the best method of enforcing prohibition, the complete extermination of all alcohol.
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This is a condition for which the chemists, in a large measure, are responsible, and a condition which they and the industries using alcohol can and must remedy. They have not adequately educated the public, who make and enforce our laws, in the matter of the essential needs of chemical industry. To educate that public is a big contract, but it must be undertaken and successfully carried through by the chemists working individually and collectively, if alcohol, and all industry directly and indirectly related to it, is to be saved. Chemists look upon alcohol as one of the most essential and important materials of their industry. They put it in the same class with sulfuric acid, benzene, or caustic soda. They know there can be no great development of chemical industry without alcohol, any more than there could be a steel industry without pig iron, an electric industry without copper, or a fertilizer industry without potash and fixed nitrogen. While alcohol may not be used directly in the manufacture of textiles, automobiles, or sugar, any chemist can draw a flow sheet t o show its relation to some of the contributing industries. Furthermore, petroleum experts issued a warning a t the last meeting of the AMERICAN CHEMICAL SOCIETY in Rochester, in regard to the visible supply of liquid fuels, which ranks in importance with the famous warning of Sir William Crookes in reference to nitrogen for fertilizer. They pointed out that, in from fifteen to twenty years, the rapidly diminishing supply of petroleum will compel the world to turn to some other source for liquid fuel. The only possible solution to the problem in this distressingly short time is alcohol.
TAXATION OF INDUSTRIAL ALconor, Taxation of alcohol has grown out of the habit of taxing a!coholic beverages. There is no more reason why a tax should be levied against alcohol (the chemical) than there is for levying a tax against sulfuric acid, caustic soda, benzene, or coke. Congress voted in 1906 tax-free alcohol for industrial and scientific purposes, and properly retained a t that time the tax on beverage alcohol. This action of Congress was reiterated in the industrial alcohol law of 1913, and again in Title I11 of the prohibition act of 1919. The sub-title of the 1919 act and Section 13 of the same act have already been quoted in this paper. In view of the above declared purposes of Congress in the alcohol acts of 1906 and 1913, and in the title and body of the prohibition act, what justification can there be for imposing a tax upon alcohol used in medicinal, proprietary, toilet, antiseptic, and flavoring extract industries? The Government has already gone far beyond the advice of its own legal experts and the intent and purpose af Congress in exacting a tax of 1000 per cent upon the alcohol used in these industries. This is an indirect tax upon the users of the products of these industries; that is to say, the unfortunate sick who have to use U. S. P. and proprietary medicines, the fastidious who use toilet and antiseptic preparations, and the housewives who use flavoring extracts and sirups; and in spite of all this legislation on behalf of industry, may they still rule that the analytical and works control chemist must pay a tax of 1000 per cent upon the alcohol used in his routine work? ADMINISTRATION OF THE PROHIBITION ACT The Industrial Alcohol Section of the National Prohibition Act (Title 111) theoretically became effective on October 28, 1919, although administrative regulations (No. 61) were not approved thereunder until January 31, 1920, and February 5,1920. Laws will not administer themselves, and this is especially true of the National Prohibition Act. No provision whatever was made by the Government, a t the outset, to separate the administration of industrial alcohol from prohibition. Under the ceaseless pressure of the Anti-Saloon League, all energies were arbitrarily directed to organizing for, and administering, prohibition, while the industrial alcohol provisions of the law were literally lost in the fog.
July, 1921
T H E JOURNAL OF I N D U S T R I A L A N D ENGINEERING CHEMISTRY
The situation for alcohol for the industries, for research, and for education became so serious that, in June 1920, a large committee, representing leading educators, investigators, chemical societies, consumers and producers, and the War and Navy Departments, journeyed t o Washington, and strongly protested a t the neglect of the legitimate alcohol industry in the scramble to enforce prohibition. This protest finally resulted, in October 1920, in the creation of the Division of Industrial Alcohol and Chemistry, under Captain D. s. Bliss, Deputy Prohibition Commissioner, with Dr. J. M. Doran, of the Bureau of Internal Revenue, a chemist of high professional standing and long experience, in charge. When a government department assumes control of an industry, it assumes an obligation to the nation as a whole, which I am sorry to say is not always recognized, and that is an obligation to govern well and govern wisely. Ignorance OF the industrial needs and economic requirements is no excuse for “pushing with both feet when in doubt” and no excuse for “stalling the engine.” This Division has not had an opportunity to achieve the full measure of its importance because it is still subordinated to the prohibition provisions of the law. A Division of Industrial Alcohol and Chemistry, directed by competent chemists equipped with adequate facilities, and charged with the full responsibility of administering all alcohol for industrial, scientific, and nonbeverage uses, is clearly implied when industrial alcohol is given a separate section of the law, and the legal provisions to “place the nonbeverage alcohol industry and other industries using such alcohol as a chemical raw material or for other lawful purpose u p o n the highest possible plane of scienti;fic and commercial ejiciency” are made mandatory. The chemical profession and the chemical industry should unite to make the Division of Industrial Alcohol and Chemistry what it is legally stated to be, and what the economic future of this country demands that it should be-an organization to control alcohol, the chemical.
THE:NEWBILL, H. R. 6752 Let us turn our attention to the new bill now before the House, which is a further encroachment upon chemical industry. The development of industry as a whole is a matter of bread and butter to the chemist; the greater that development, the more bread and the more butter will be available to those men who have chosen chemistry or the chemical industry as their profession. New legislation, of which we are threatened with a surfeit, and which threatens chemical industry, deserves the attention of all chemists. This new bill (H. R. 6752) introduced by Mr. A. J. Volstead, chairman, Committee on Judiciary, and sponsored by Mr. Wayne B. Wheeler, counsel of the Anti-Saloon League, is admittedly intended to prohibit beer, although the word “beer” is not used in the proposed act. You have all heard of “jokers” in legislative enactments. This bill is a “fleet of jokers,” some of which are extremely important to those of us who are dependent for our living upon chemical industry. The first sentence in Section 2, prohibiting beer without saying so, is characteristic of the subtle and evasive character of the wording of other provisions of the bill. Stripped of legal verbiage, the bill provides: 1-For the prohibition of beer, without using the word “beer.” 2-The granting of arbitrary power to the Commissioner of Internal Revenue to substitute his lay judgment for that of the professional physician in the matter of the kind and amount a€ wines that may be prescribed in case of sickness. &-For the arbitrary limitation of the prescribing or selling of wines containing more than 24 per cent alcohol and more than one quart to any one person in ten days. 4-For limiting the number of prescriptions a physician may write to one hundred in ninety days. &For limiting, by the Commissioner of Internal Revenue,
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the amount of spirituous liquor which may be imported into the United States. 6-For limiting, by the Commissioner of Internal Revenue, the amount of liquor for medicinal purposes, save alcohol, t o be made in the United States. 7-For the cancellation of permits to manufacture ( a ) U. S. P. or N. F. medicines, (b) proprietary medicines, ( c ) toilet, medicinal, and antiseptic articles, ( d ) flavoring extracts, if he shall find that they are “being Purchased for use as a beverage, orfor intoxicating beverage purposes.” 8-For the replacement of all alcohol-bearing substances (i. e., whisky, brandy, wines, etc.) in U. S . P. medicines, proprietary medicines, toilet, medicinal and antiseptic articles, flavoring extracts and sirups, by alcohol. 9-For the securement of a permit to manufacture products (which under existing law must be unfit for beverage purposes) such as U. S . P. medicinal preparations, proprietary medicines, toilet, medicinal and antiseptic preparations, flavoring extracts, sirups, etc., in which alcohol is used. 10-For the serving of notice of such an application on the Attorney General. 11-For the public posting of notice of intention to manufacture such articles a t the place of business of the manufacturer. 12-That any federal or state officer, or any person authorized by such officer, may oppose the application. 13-For the arbitrary power for the Commissioner to revoke permits to manufacture. 14-For the Attorney General to designate some suitable person or persons to perform the duties imposed upon him by this Act. 15-For the extension of the provisions of this supplemental Act to the territories, including Hawaii, and the Virgin Islands. 16-For conferring jurisdiction upon the Courts in the territory of Hawaii and the Virgin Islands to enforce the National Prohibition Act. 17-For regulations to carry into effect the provisions of this Act. 18-For fines and, or, imprisonment as provided in the Kational Prohibition Act, as follows: A n y person who manufactures or sells liquor in violation of this Title shall for the first offense be fined not more than $1,000.00 or imprisonment not exceeding six months, and for the second or subsequent offense shall be fined not less than $200.00 nor more than $2,000.00 and be imprisoned not less than one month or more than five years.
For purposes of discussion, the bill may be divided into three parts: 1-The prohibition of beer, and limiting prescriptions. 2-The extension of governmental control, under the guise of prohibition, t o the U. S. P. medicines, the proprietary, the perfume, and the flavoring extract industries. 3-The penalties. Again we as a profession are not concerned with the prohibition features of this bill. It might be fair to assume that our professional associates, the medical men, would wince at the idea of having the judgment of a Commissioner of Prohibition supersede that of the 150,000 medical practitioners in the United States. Government control of industry is not a new idea. The railropds, the telegraphs, and many of our industries will have reason for many years to appreciate the full meaning of government control brought about by the war. The past administration deserves to go down in history’s Hall of Fame for having demonstrated the complete impracticability of government control of industry. Nevertheless great ingenuity will continue to be displayed by those with socialistic tendencies, in the invention of subtle means to effect government domination of industrial activities. We shall have such schemes as control by means of government administered patents, control of industries affecting the farmer, control through tax interest in products and profits under the guise of taxation for revenue, and finally control as a means of administering social reform. The proposal to include under this bill a iroup of industries, conforming in every respect to the provisions of the Eighteenth Amendment, the National Prohibition Act, and every other law of the land, is plainly an effort to extend government control where it is neither necessary nor desirable. Your home town laws used to require a man who proposed to open a saloon in a neighborhood to post a notice of his in-
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tention upon the doors and walls of the building, in order that the whole neighborhood might be advised of the impending stigma that was about to be placed upon it, and have an opportunity to work up opposition. Similarly, the pending bill in the case of a manufacturer proposing to engage in the business of making pharmaceutical, proprietary, toilet and antiseptic articles, or flavoring extracts, requires that “Notice thereof shall be served on the Attorney General and publicly posted a t applicant’s place of business * * * * ” and further, “any Federal or State Officer or any person authorized thereto by any such officer may oppose any such application.” Why should a legitimate chemical industry and its owners and employees be stigmatized and put in the class with the corner saloon or the bootlegger, and the clear implication held out that he is engaged, or is about to engage in a business of questionable character? Why should legitimate business plans be disclosed by “notice of intention,” and why should another opportunity be created, by law, for graft ? Another provision of the bill gives concurrent power to the Commissioner of Internal Revenue and to the Attorney General, and also provides that the Attorney General may designate “some suitable person or persons to have charge of and perform the duties imposed upon him by this Act.”
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This means. in plain English, that these legitimate industries, because they require and use alcohol, will have to submit their business, their operations, and their employees to control, not only by two independent government departments, but also by an additional unknown quantity designated as “some suitable person or persons.” Who do you think it or they will be? The risks of doing business under such conditions would alienate legitimate investors. No chemist could afford to risk a fine of $1000 or a jail sentence for five years for some alleged or technical violation of the law. Such provisions as these stigmatize an important division of chemical industry, and that stigma passes to the chemical profession as a whole. Successful enforcement of prohibition requires the cooperation of the chemists t o a greater extent than that of any other profession, and that cooperation cannot be obtained by wholly unnecessary or misdirected stigmatization. Does the spirit of the proposed bill conform to the principle of placing “the nonbeverage alcohol industry and other industries using such alcohol as a chemical raw material, or for other lawful purposes, upon the highest possible plane of scientific and commercial efficiency,” as already provided in the Industrial Alcohol Section of the existing Prohibition Enforcement Law?
SOCIAL INDUSTRIAL RELATIONS The Biological Trend of Industry By H. W. Jordan SYRACUSE. N. Y .
As we study industry in order to chart a safe course through future years, we become deeply impressed with the fact that the trend of social, industrial life is in close accord with the laws of evolution, and that industry, to be profitable through the coming half century and longer, must avail itself of biology and the associated sciences to as great an extent as it has used physics and chemistry for its guide during the past forty years. Engineering industry since 1880 has made huge progress by combining applied science with extreme specialization. One man used to build an entire wagon. Wagon building was a handicraft. The automobile is cut into a hundred separate machine tasks. All industry is the same. I n consequence we have passed from a generalized, whole job people to a specialized, part job people. From biology we learn that generalized species have great powers of survival, and that specialized species have steadily declining powers of survival, unless the specialization be correctly counterbalanced by cooperation. The most highly perfected social organizations are those of the ants and the bees, among whom the three vital functions of reproduction, nutrition, and housing and defense are completely specialized. Yet hill or hive life is perfect; because there is 100 per cent cooperation. No class or individual tries to seize the privileges or functions, the rights or duties of its associates. Each bee and ant does its full share of work to the utmost of its ability. Ideal Democracy, whether of government or industry, means, not less specialization, but fuller cooperation. The science of bidogy, of evolution, proves that our best defense against the harmful influence of specialization is complete social industrial cooperation. Class contention, whether of labor or capital, hastens and deepeqs the ill effects of specialization. It is a pleasing popular notion that the huge material progress of the last generation is to continue indefinitely. Folks think, as they did in the fur coat and silk shirt days of the war, that there can be no end to the almost vertical material advance. But as Professor E. G. Conklin recently said in “The Direction of Human Evolution,” a book from which every American business executive and engineer can gather knowledge of profound value :
“Again and again in the evolution of animals and plants extreme specialization in certain lines has brought about rapid progress, but has led to a lack of stability and adaptation and has ended in extinction. There is good reason to believe that the same is true of the evolution of human society. Extreme development of ideals of organization and efficiency or of liberty and equality, leads to an unbalanced state of society. Stable progress consists in advance along cooperative lines.” The rushes of advance by specialization are correctly represented by the upper half of a parabola. The parabola risesat first almost vertically, then swings over into an approximation to the arc of a circle, and flattens finally into a line almost horizontal. Now, in 1921, we are started on such a horizontal line of material, industrial development. The wonder days are over. We must lay our fur coats and silk shirts away in tar paper with moth balls, and settle down on a straightaway course of industrial plugging. Material, industrial progress has become static. When one movement in evolution becomes static, a new movement surges up. It is clear that the evolution that will occupy US the next half century is of democracy; democratic expression of the mind in government, society, and industry. And that if we provide guidance in accordance with the constructive phases of evolution, the movement will lay an orbit of constructive cooperation. But if we say it is no affair of ours, and permit matters to drift, the result will be the steady decline which experience proves inevitable. “Insistence on personal freedom and on the rights of individuals has gone far toward weakening the bonds of union and destroying cooperation,” says Conklin. “Unquest:onably the further evolution of society must lie in the direction of greater cooperation, and any system of organization which exalts individual freedom to the detriment of social union and harmony must go under in the struggle for existence. The greatest problem which confronts all types of government is the problem of social cooperation. It was the failure of cooperation rather than of specialization which led to the downfall of almost every great civilization of the past, and it is this danger especially which confronts the modern world.